Question

In: Accounting

The following transactions occurred in April at Steve’s Cabinets, a custom cabinet firm. Purchased $80,000 of...

The following transactions occurred in April at Steve’s Cabinets, a custom cabinet firm.

  1. Purchased $80,000 of materials on account.

  2. Issued $4,000 of supplies from the materials inventory.

  3. Purchased $56,000 of materials on account.

  4. Paid for the materials purchased in transaction (1) using cash.

  5. Issued $68,000 in direct materials to the production department.

  6. Incurred direct labor costs of $100,000, which were credited to Wages Payable.

  7. Paid $106,000 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant.

  8. Applied overhead on the basis of 125 percent of $100,000 direct labor costs.

  9. Recognized depreciation on manufacturing property, plant, and equipment of $50,000.


The following balances appeared in the accounts of Steve’s Cabinets for April.

Beginning Ending
Materials Inventory $ 148,200 ?
Work-in-Process Inventory 33,000 ?
Finished Goods Inventory 166,000 $ 143,200
Cost of Goods Sold 263,400

Required:

a. Prepare journal entries to record the transactions.

b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.

Solutions

Expert Solution

TR General Journal Debit Credit
1) Raw materials inventory 80,000
Accounts payable 80,000
2) manufacturing overhead 4,000
Raw materials inventory 4,000
3) Raw materials inventory 56,000
Accounts payable 56,000
4) Accounts payable 80,000
cash 80,000
5) work in process inventory 68,000
Raw materials inventory 68,000
6) work in process inventory 100,000
Wages payable 100,000
7) Manufacturing overhead 106,000
Cash 106,000
8) work in process inventory 125000
manufacturing overhead 125000
9) manufacturing overhead 50,000
Accumulated depreciation 50,000
Materials inventory Work in process inventory
Beg bal 148,200 Beg.Bal 33,000
1 80,000 4,000 2 5) 68,000 240,600 Finished goods
3 56,000 68,000 5 6) 100,000
8) 125,000
End bak 212,200
end bal 85,400
Manufacturing overhead control Applied manufacturing overhead
Beg bal 0 Beg bal 0
2) 4,000 125,000 8)
7) 106,000
9) 50,000
End bal 160000 end bal 125,000
Accounts payable Cash
Beg bal 0 beg bal 0
4) 80,000 80,000 1) 80,000 4)
56,000 3) 106,000 7)
End bal 56,000 End bal 186,000
Wages payable Accumulated dep=-PP&E
Beg bal 0 Beg bal 0
100,000 6) 50,000 9)
End bal 100,000 End bal 50,000
Finished goods inventory Cost of goods sold
Beg bal 166,000 beg bal 0
WIP 240,600 263,400 finished go 263,400
End bal 143,200 End bal 263,400

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